Be Prepared For Rio Tinto plc’s Upcoming Results

A preview of Rio Tinto plc’s (LON:RIO) upcoming half-year results.

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Rio Tinto (LSE: RIO) (NYSE: RIO.US) is due to announce its half-year results on Thursday next week (8 August).

At the time of writing, the shares of this FTSE 100 miner are trading at 2,955p — down 17% from six months ago compared with a 5% rise for the Footsie.

How will Rio’s business have performed in the first half compared with last year’s first half? And will the company be on track to meet forecasts for this year’s key full-year numbers? Here’s your cut-out-and-check results table!

  H1 2012 FY 2012 H1 2013 Forecast
FY 2013
FY growth
Revenue $25.3bn $51.0bn ? $54.6bn +7.1%
Underlying earnings per share (EPS) $2.78 $5.03 ? $5.13 +2.2%
Dividend per share $0.725 $1.67 ? $1.80 +7.8%

In common with other miners, Rio suffered a poor 2012 as a result of weak commodity prices and industry-wide cost pressures. Rio’s revenues dropped 16% and EPS plummeted 38% — that’s underlying EPS, mark you; statutory EPS was negative to the tune of $1.62 amounting to a $3bn bottom-line loss.

City analysts are forecasting a relatively modest bounce in revenues and earnings for 2013. The consensus is for a 7% increase in revenue to $54.6bn — but the range of forecasts between the most bearish ($48bn) and bullish ($68bn) is extremely wide. Similarly, EPS estimates extend from $3.86 to $6.68 around the $5.13 consensus.

Agreement among the analysts is equally lacking on the upcoming half-year results. For what it’s worth, look for a revenue number between $23.5bn and $27.5bn, and EPS between $2.40 and $2.80. Not much help, I know!

Thankfully, we can be reasonably confident of being precisely on the mark when it comes to next week’s dividend announcement. It’s Rio’s policy to set the interim at half the previous year’s total dividend. As the 2012 payout was $1.67, shareholders can expect to see a $0.835 first-half dividend — up 15% on the $0.725 declared this time last year.

New boss

The upcoming set of results will represent the first period over which new chief executive Sam Walsh has exerted his influence. Walsh took over in January when Tom Albanese fell on his sword on the day Rio announced $14bn of writedowns to the value of expensively acquired aluminium and coal assets.

Walsh said soon after his appointment: “Under my watch, our strategy will not change – but how we deliver it will”. Essentially, the strategy is to divest non-core assets, cut costs, improve operational performance within the existing businesses, and allocate capital to new opportunities in a more disciplined fashion than in the past.

Shareholders will be keen to hear more from Walsh now that he’s been in the boss’s chair for six months.

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> G A Chester does not own any shares mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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